20 June 2000 Internal T.I. 2000-0025627 - PEI - SKILLS DEVELOPMENT PROGRAM

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: Whether benefits received by a taxpayer under the Prince Edward Island Skills Development program are taxable and whether the recipient is entitled to the education tax credit under subsection 118.6(2) of the Income Tax Act (the "Act") in respect thereof.

Position: The amounts are taxable and the recipient is not entitled to the education credit.

Reasons: Benefits received under the Skills Development Program are taxable pursuant to subparagraph 56(1)(r) of the Act, and the recipients of such amounts are not eligible for the education tax credit.

		June 20, 2000

	Charlottetown Tax Services Office	HEADQUARTERS
	Client Services Division	J. Gibbons
(613) 957-2135
	Attention: Sharon Dunne
		2000-002562

Skills Development Benefits

We are replying to your memorandum of May 9, 2000, in which you requested our views on whether benefits received by a taxpayer under the Prince Edward Island Skills Development program are taxable and whether the recipient is entitled to the education tax credit under subsection 118.6(2) of the Income Tax Act (the "Act") in respect thereof.

It is our view that benefits received under the Skills Development Program are taxable pursuant to subparagraph 56(1)(r) of the Act. This provision subjects to income tax various training-related amounts, including financial assistance received under Part II of the Employment Insurance Act and similar financial assistance received from a government or government agency under the terms of an agreement with the Canada Employment Insurance Commission.

In order for students to claim the education credit under subsection 118.6(2) of the Act, they must be enrolled in a "qualifying education program" as defined in subsection 118.6(1) of the Act. In general, the credit is not available to a student who receives any allowance, benefit, grant or reimbursement for expenses (other than as a scholarship, fellowship or bursary, prize for achievement in a field of endeavour ordinarily carried on by the student or loan granted in accordance with the Canada Student Loans Act or Student Loans and Scholarships Act of the Province of Quebec) from a person with whom the student is dealing at arm's length.

It is our view that amounts received under the PEI Skills Development Programs will normally be considered allowances or benefits for the purposes of section 118.6 of the Act. Thus, the recipients of such amounts are not eligible for the education tax credit.

Finally, we note that it is the responsibility of the provincial governments to determine what, if any, information slips must be completed in respect of amounts paid out under the programs they administer. Accordingly, taxpayers should contact them if they disagree with how certain items are reported.

John Oulton
for Director
Business and Publications Division
Income Tax Rulings Directorate